Judge confirms ruling to probe Arizona nonprofit political group

SACRAMENTO, Calif. (AP) — A state judge has approved a request from California’s political watchdog agency to investigate the donors behind an $11 million campaign contribution from an Arizona nonprofit.

Sacramento County Superior Court Judge Shelleyanne Chang’s final ruling issued Wednesday night said voters would suffer if the California Fair Political Practices Commission is not allowed to investigate the group, Americans for Responsible Leadership.

The Phoenix-based group gave $11 million earlier this month to the Small Business Action Committee PAC, which opposes Gov. Jerry Brown’s November initiative to hike taxes and supports a separate initiative that would greatly restrict unions’ ability to raise money for political purposes.

In confirming a tentative ruling she issued Tuesday, Chang said the Fair Political Practices Commission has the authority to audit the group’s records before the Nov. 6 election to determine whether any California election laws apply.

The commission has argued that as a major donor giving more than $10,000, the Arizona nonprofit is required to file a pre-election statement at least 12 days before an election and notify any recipients if the money was earmarked for a specific political committee. If any of the money was earmarked, the Small Business Action Committee PAC would be required to disclose the donors, commission attorneys said.

Chang wrote in her ruling that “irreparable injury to the people of the state of California will flow from a refusal to grant the preliminary injunction requested.”

With the final ruling, the nonprofit has 24 hours to comply with the commission’s request to review its financial documents, although a spokesman has said the group will appeal.

“We are disappointed in the today’s court ruling,” said Matt Ross, a spokesman for Americans for Responsible Leadership’s legal team. “We have asserted all along that the FPPC does not have the authority to issue an audit in advance of the election. We continue to believe so and will appeal this case.”

Even with the final ruling, it seems unlikely that voters will know the source of the money before Election Day because of the appeal and legal procedures that are expected to follow.

The group had argued that the commission’s action was politically motivated and said it was being singled out because it supports conservative positions.

Three Phoenix-area men are listed on documents as directors of Americans for Responsible Leadership, which was formed last year: Steven Nickolas, president of Silver Sky Capital; Robert Graham, president of RG Capital Investors; and Eric Wnuck, an unsuccessful Arizona congressional candidate in 2010.

The group has given more than $1 million to oppose two initiatives on the Arizona ballot: one that would raise the statewide sales tax to provide more money for schools, and another that would modify the state’s primary election system.

In California, the campaign commission’s chairwoman, Ann Ravel, has said her agency needs to know whether donors to Americans for Responsible Leadership intended for their money to be used for political campaigns in California. If so, that would trigger the state’s disclosure requirements.

Ravel, who was appointed by Democratic Gov. Jerry Brown, said Wednesday that the Arizona group is using stalling tactics to avoid complying with the law before Election Day, but her agency will aggressively pursue the case, even as millions of Californians have already turned in their vote-by-mail ballots.

Because ballot initiatives are often so complex, Ravel said, “the issue is who is making the contribution in favor of or against, and that often sways voters.”

The nonprofit had argued that the contribution is protected by the U.S. Supreme Court’s 2010 Citizens United decision, but the judge said that was irrelevant to the current case. The group also argued that it should not be subject to an audit until after the election.

The money coming from the Arizona-based group to attack Proposition 30 is just the latest problem for the governor, who has faced much stronger opposition to his initiative than he originally anticipated. The initiative, which would help close the state’s budget deficit by increasing the state sales tax and income taxes on those who make more than $250,000 a year, was failing to achieve majority support in the latest public opinion survey.